Minister Calls for End to Electricity Subsidy, Explains How Much FG Owes GenCos, DisCos

• Nigeria's Minister for Power, Chief Bayo Adelabu, has revealed the huge amount the federal government owes GenCos and DisCos
• Adelabu explained how this debt accumulated over time and the major components adding to the debt
• Meanwhile, the federal government earlier revealed that it spends up to N200 billion on electricity subsidies monthly

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

The federal government of Nigeria has revealed that it owes electricity generation companies (GenCos) and distribution companies (DisCos) up N4 trillion.

This huge debt is part of challenges hindering the sector from investing in the needed infrastructure to improve electricity supply in Nigeria.

The Minister of Power, Adebayo Adelabu, disclosed this on Thursday, while speaking at the public presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP) in Abuja.

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Adelabu explained that legacy debt owed to the GenCos is about N2 trillion, with additional unpaid subsidies for 2024 amounting to another N1.97 trillion. For DisCos, the government owes up to N450 billion unpaid subsidies in 2024.

Power Minister calls for end to electricity subsidies

The minister noted that with such a huge debt burden, the electricity distribution companies were not able to buy enough gas for power generation, maintain or acquire the needed infrastructure.

According to a Premium Times report, Adelabu noted that the recent increase in electricity consumption has made it unsustainable for the government to keep up.

This was the Minister's reason for the earlier call to review tariffs of customers on Band B and other bands.

Manufacturers are off-grid because of reliable power supply

The minister lamented the current situation where many manufacturing companies engage in self-generation because of the unreliable supply from the grid. He noted that such power generation is more expensive and eventually results in higher prices of goods and worse inflation.

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Adelabu noted that it is not possible to build a competitive industry that way, hence the need to ensure a steady power supply and attract them back to the grid.

Recall that these companies left the grid because of an unsteady power supply despite the increase in tariffs.

He remarked that the NIEP serves as the guiding framework for Nigeria’s power sector, guiding the nation toward universal electrification goals.

He added that the National Integrated Electricity Policy and the Integrated Resource Plan will present Nigeria with a unique opportunity to transform the power sector through data-driven, evidence-based approaches that will impact enterprises of all sizes, create jobs and grow the economy.

FG spends N200 billion on electricity subsidies

In related news, the federal government says it spends N200 billion on electricity subsidies every month.

SA to the President on Energy, Olu Verheijen, noted that this is because the current price regime is not cost-reflective.

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She added that the government is committed to working out a fair pricing plan that will not impose on the poorest and most vulnerable Nigerians.

Source: Legit.ng